In Spain, according to a survey carried out by Infojobs, 51% of organisations offer the option of teleworking to their employees. The possibility of having employees anywhere in the world means access to valuable talent for any company, but this also has a tax implication, as we will see below. In this article we talk about Form 296, what it is, when it is filed and what instructions to follow in order to fill it in properly.
Since the confinement due to the COVID-19 pandemic, many companies have had to rethink the way they work and many workers have had to rethink the way they serve their organisations and the way they live. This led to the spread of remote and hybrid working, which has enabled companies of all sizes to have employees in any location.
What is form 296?
Index of contents
Form 296 is an annual information return relating to withholdings and payments on account of non-resident income tax. Therefore, over the course of the year, Form 216 must have been filed and these must coincide with Form 296.
In short, this is a document that must be filed with the Tax Agency by persons or entities that work in Spain, but do not have their habitual residence in Spanish territory, and that receive income in our country.
For example: a Spanish company hires an employee abroad to work remotely and pays him/her a salary. Form 296 will have to be filed.
However, if the person spends more than 183 days a year in Spain, their main economic activity takes place in Spain or their spouse or minor children have their habitual residence in our country, this form does not have to be filed.
Deadline for filing Form 296
Form 296 must be filed between 1 and 31 January of each year, if the filing is made electronically. If the end date of the deadline coincides with a non-working day, the following working day shall be considered as the end date.
In the event that, for technical reasons, it is not possible to file Form 296 online within the established deadline, this may be done during the four days following the end of this period.
If Form 296 is filed by filing, the filing period runs from 1 to 20 January of each year.
However, you will not be able to use this form of filing, but only the online form, if you declare more than 15 recipients in a year.
Form 296: filing instructions
The first thing you will need to do is access the Tax Agency website at this link. To access you will need to use either the Cl@ve mobile system or the electronic certificate or DNI. Next, you will need to fill in the following details:
- Registration of the declarant. This must include the identification details of the declarant (the company or self-employed person who has made the withholdings and payments on account for the year), figures for the year being declared (2023 or the corresponding year), whether it is a substitute or complementary declaration (in which case you must identify the previous declaration with the thirteen digits), and a summary of the declaration details: total number of recipients, basis of the withholdings and payments on account, date and signature.
- Register of the payee. This includes the data that identifies the recipient (NIF, usual address), the nature of the income (work or professional activities), the basis for withholdings and the withholding percentage.
You will be able to download a pdf draft to check all the data. Once all the information on the return is correct and there are no errors, you will have to validate the form, save it and click on the sign and send button.
What happens if the Form 296 is filed after the deadline or is filed with errors?
If you do not file Form 296 within the period detailed above, from 1 to 31 January each year, the Tax Authorities may impose a penalty. If you do not agree with the penalty, you will have to present allegations and prove everything you claim. This process can also be done electronically.
Therefore, it is necessary to be aware of the deadlines and to have the help of tax experts to carry out the process without errors and on time.
On the other hand, if it is presented with any error, the procedure must be started again and it must be indicated that it is a substitute or complementary tax return. In these cases, as it is a voluntary rectification, no penalty will be imposed.
In short, it is important to be aware of the tax obligations in each case and the forms to be filed in order to avoid tax inspections and penalties.
